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28 Feb 2011
PLANS TO spot check small and medium enterprises' record-keeping could cost the taxman ten times more than it has estimated, the Institute of Chartered Accountants of Scotland (ICAS) has claimed.
HM Revenue & Customs is currently consulting on proposals to visit 50,000 SMEs a year to check the adequacy and accuracy of their business records. It has estimated the cost of each half day visit to the businesses at around £54.
Further reading
But ICAS has claimed that this estimate is "massively understated". It has re-costed the figure at over £560 using "realistic estimates of business disruption and adviser's time".
Ian Dewar, Convenor of the ICAS Small Business Tax Sub-Committee, said that poor record keeping often results in businesses paying too much tax, contrary to "HMRC's basic assumption" that "SMEs with poor records have chosen to have poor records".
He added: "HMRC should be looking for positive ways of encouraging taxpayers to maintain adequate records, rather than adopting a big-stick approach that we believe will cost owner managers a lot of resource that could have been better directed towards growing their businesses."
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Visitor comments Add your comment
HMRC get their costings wrong.
£54 will not even cover the admin time sending the letters to book the visit and the stamps thereon.
I have been told by visiting inspectors - several times over the years - that the cost to HMRC of any sort of on site visit is around £1000 a day.
Posted by: Eleanor, 28 Feb 2011 | 17:24
Accounting records
Book-keeping systems that do not adequately reflect all income and expenses and cannot produce accurate profit and loss accounts and a Balance Sheet must be considered poor. Only a good double entry accounting system can be relied upon, with diligent care being given to all entries.
Posted by: David Beaumont F.C.A., 02 Mar 2011 | 11:09
What utter bilge
I am glad I am not one of Mr Beaumont's client's!
Posted by: Old Greying Accountant, 04 Mar 2011 | 11:24
Agree with second mailer
We are talking about SMEs here, most of which have limited resources and experience. Suppose Mr Beaumont would like them to use a chartered accountant when someone with a lesser qualification can do the job admirably!
Posted by: John wainscott FMAAT, 26 Apr 2011 | 18:11